When comparing the autonomous expenditure multiplier in a closed-economy model to the autonomous expenditure multiplier in an open-economy model it can be concluded that a. the multiplier in the open-economy model will be larger than in the closed-economy model. b. the multiplier in the open-economy model will be smaller than in the closed-economy model. c. […]
According to Keynes, a shift in liquidity preference is a. a shift in the money demand schedule drawn against the interest rate as the level of income changes. b. a change in the amount of money demanded for given levels of the interest rate and income. c. a shift in individuals’ portfolios away from bonds […]
With a closed economy and no government spending, the total demand for output is equal to ________. A) consumption per-worker plus investment per-worker B) consumption per-worker minus investment per-worker C) consumption per-worker times investment per-worker D) consumption per worker divided by investment per-worker ANSWER A
The primary emphasis in U.S. national income accounts is on a. gross national product. b. gross domestic product. c. net national product. d. personal disposable income. ANSWER B
Assuming a 10-percent decrease in both the nominal (money) wage and the price level in the classical model, then the quantity of labor supplied will a. also decrease by 10 percent. b. increase by 10 percent. c. remain constant. d. decrease by less than 10 percent. ANSWER C
Monetarists and Keynesians agree that expectations are a. backwards-looking. b. rational. c. unstable. d. forwards-looking. ANSWER A
One of the consequences of inflation between 1950 and the 1970s was ________. A) a large increase in the federal deficit as a percentage of GDP B) a relaxation of the government budget constraint C) an increase in the dependency ratio D) a reduction in the ratio of debt to GDP ANSWER D
When drawn against the real interest rate, output demand increases if A) current government expenses increase. B) future government expenses increase. C) current taxes increase. D) future taxes increase. ANSWER A
If Md = 2,600 – 200r, the MPC = .75, G=100, and T = 100 . If the central bank wants the interest rate to be r=2, then the money supply must be a. 5. b. 400 c. 300 d. 3,000 e. not enough information was given. ANSWER D
Assume that you purchased a $1,000 perpetual bond and the interest rate on that bond declined from 5 percent to 2 percent. Thus, a. the bond price increased by $1,500. b. you could sell this bond at a capital gain. c. if this was anticipated, the speculative demand for money fell. d. All of the […]
